With Americans distracted by COVID-19, an unexpected Supreme Court nomination and ongoing leftist rioting in our city streets on a near-nightly basis, they might be forgiven for forgetting about what might happen to their taxes should Joe Biden be elected. It won’t be pleasant.
Wednesday night’s vice presidential debate was enlightening, if only because it showed how little Sen. Kamala Harris understands about how Washington works and how the economy works — and what would-be President Biden really intends to do.
Asked about President Donald Trump’s tax cuts, which most economists agree are largely responsible for the resurrection of the U.S. economy following the slow-growth Obama-Biden years, Harris said: “On Day 1, Joe Biden will repeal that tax bill.”
Never mind that a President Biden will have no such power to “repeal” anything. That’s Congress’ job, and if Biden isn’t blessed with having both branches of Congress firmly in far-left Democratic hands, “repealing” the tax cuts won’t happen.
But then Harris went on to say Biden wouldn’t raise taxes on those earning less than $400,000. Say what? By “repealing” Trump’s tax cuts, he would be doing just that.
The truth is, Biden has played games with his tax plans all along. But the actual tax plans he has revealed would be nothing short of disastrous for working men and women, and the economy as a whole. Those plans plainly show that 77-year-old Biden, a lifelong politician, understands nothing about the private economy. That is, apart from it being a great source of graft for him and his family.
A report out just this week from the Committee for a Responsible Federal Budget estimates that taxes would rise about $4.3 trillion over the next decade under Biden’s plans, while taxes under Trump would actually decline by $1.7 trillion over that period.
At least, you say, that $4.3 trillion in added taxes under Biden would cut the deficit more than Trump’s plans, right? Wrong.
The CRFB notes that its projections show a 10-year rise in federal deficits of $8.3 trillion for Biden, versus $6.9 trillion for Trump.
The difference, of course, is economic growth.
Trump’s policies, starting with the 2017 tax cuts and deregulation, proved potent at kick-starting the economy that stalled under President Barack Obama, whose eight years in office were marked by the slowest recovery since the Great Depression.
Biden’s plans to raise taxes and hand the money to bureaucrats to spend would be just a replay of the dismal record of the Obama administration, in which he served. It raised taxes, effectively nationalized most of our health care system, increased regulation and attacked business owners, a surefire recipe for slower growth.
Fox Business helpfully breaks down Biden’s current plans:
“The largest tax increase under the Biden plan would come from an increase in corporate tax rates to 28% from 21%, along with a handful of other tax hikes including a 15% minimum tax on ‘book profits. That would bring in $1.8 trillion, according to the CRFB’s central estimate.
“Biden would also increase taxes on those making more than $400,000 per year by boosting the top income tax bracket rate to 39.6% from 37%. He would boost capital gains taxes to 39.6% from 20% for individuals and couples making more than $1 million and he would eliminate the ‘stepped-up basis’ at death on capital gains for higher earners.”
Other plans include a $900 billion tax hike for Social Security, a $100 billion tax on banks as a “financial risk” fee, and another $100 billion from an IRS crackdown on tax evasion.
None of this includes the Democrats’ New Green Deal, higher education spending to placate teachers’ unions, and the proposed Universal Basic Income, which combined will cost trillions and trillions of dollars.
These tax hikes and increased spending won’t just have a bad effect on your personal finances. They’ll also reduce incentives to work for everyone, while at the same time shrinking both investment and jobs, the linchpins of economic growth.
“Under current law, the weighted average marginal effective tax rate (METR) on business assets is 19.6%,” notes economist Kyle Pomerleau of the American Enterprise Institute in a recent study.
“Biden’s tax proposals would raise the METR on business investment in the United States by 7.8 percentage points to 27.5% in 2021. The effective tax rate would rise on most assets and new investment in all industries.”
It’s not just the taxes, either. Sharply higher federal spending under Biden — one generous recent estimate forecast just $5 trillion in new spending under a Biden administration over 10 years, but it’s likely to be much more when you consider the $30 trillion to $50 trillion in spending proposed by others in his party — will squeeze out productive private spending.
To use a highly formal, technical economic term, it’s a double-whammy.
Contrast that with the Trump years so far.
Under Trump, before the Wuhan virus lockdowns, the economy had never been better in our history. That’s especially true for minorities. At the end of 2019, Black unemployment was at record lows, as was Asian unemployment. Hispanic joblessness was close to record lows.
Meanwhile, new Federal Reserve research shows how far-reaching the improvement was, even outside of jobs, with minority households making record gains in wealth. From 2016 to 2019, White, non-Hispanic households’ median net worth rose 3%. For Black and Hispanic households during the same period, the gains were 33% and 65%, respectively.
Trump’s economic program in three years erased the Obama-era doldrums and created a vibrant, growing economy again, one that benefited all Americans.
If you liked the Obama Slump, you’ll love the Biden Bust. Only someone with virtually no private job experience could come up with such an awful fiscal plan. That’s exactly what Biden did. Keep this in mind as you view future debates and as you prepare to vote. Block out the political noise and quietly ask yourself: What’s best for me and for America? The answer should be clear.
— Written by the I&I Editorial Board